INCOME TAXES:

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES:

 Income tax expense is summarized as follows:

(Dollar amounts in thousands)	2020		2019		2018
Federal:
Currently payable	$	7,886	$	7,118	$	7,018
Deferred	1,188		2,435		1,793
	9,074		9,553		8,811
State:
Currently payable	2,422		2,168		1,699
Deferred	196		406		635
	2,618		2,574		2,334
TOTAL	$	11,692	$	12,127	$	11,145

The reconciliation of income tax expense with the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes is summarized as follows:

(Dollar amounts in thousands)	2020		2019		2018
Federal income taxes computed at the statutory rate	$	13,763	$	12,810	$	12,122
Add (deduct) tax effect of:
Tax exempt income	(2,643)		(2,551)		(2,495)
ESOP dividend deduction	(98)		(115)		(103)
State tax, net of federal benefit	2,068		2,034		1,846
General business tax credits	(1,648)		(148)		(148)
Other, net	250		97		(77)
TOTAL	$	11,692	$	12,127	$	11,145

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2020 and 2019, are as follows: 

(Dollar amounts in thousands)	2020		2019
Deferred tax assets:
Other than temporary impairment	$	753	$	754
Net unrealized losses on retirement plans	8,132		7,465
Loan loss provisions	12,150		5,288
Deferred compensation	2,496		2,615
Compensated absences	623		611
Post-retirement benefits	1,286		1,309
Lease liability	1,450		1,503
Purchase accounting	1,060		1,600
Deferred loss on acquisition	—		482
Other	2,186		2,161
GROSS DEFERRED ASSETS	30,136		23,788
Deferred tax liabilities:
Net unrealized gains on securities available-for-sale	(8,752)		(4,248)
Depreciation	(2,155)		(2,376)
Mortgage servicing rights	(390)		(332)
Pensions	(843)		(475)
Right-of-use asset	(1,446)		(1,501)
Intangibles	(5,458)		(3,285)
FHLB stock dividends	(111)		—
Other	(3,963)		(2,827)
GROSS DEFERRED LIABILITIES	(23,118)		(15,044)
NET DEFERRED TAX ASSETS	$	7,018	$	8,744

Unrecognized Tax Benefits — A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(Dollar amounts in thousands)	2020		2019		2018
Balance at January 1	$	825	$	922	$	825
Additions based on tax positions related to the current year	114		298		174
Additions based on tax positions related to prior years	—		—		—
Reductions due to the statute of limitations	(72)		(395)		(77)
Balance at December 31	$	867	$	825	$	922

Of this total, $867 thousand represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next 12 months.

The total amount of interest and penalties recorded in the income statement for the years ended December 31, 2020, 2019 and 2018 was an expense increase of $11 thousand, a decrease of $9 thousand, and an increase of $23 thousand, respectively. The amount accrued for interest and penalties at December 31, 2020, 2019 and 2018 was $64 thousand, $53 thousand and $52 thousand, respectively.

The Corporation and its subsidiaries are subject to U.S. federal income tax as well as income tax of the states of Indiana and Illinois. The Corporation is no longer subject to examination by taxing authorities for years before 2017.